Governance Trends and Building An Advisory Board With Richard LeBlanc

We recently had the chance to hear some of Richard LeBlanc’s thoughts on emerging trends in governance and building an advisory board. Richard is an award-winning lawyer and associate professor of law, governance and ethics at York University in Toronto. His work in corporate governance has influenced companies across the globe to adopt his methods for improving their performances in accountability. Interviews with Richard have appeared in the Wall Street Journal, BBC World News Radio and on Business News Network. Company leaders such as the New York Stock Exchange have described him as possessing “valuable guidance” and a “leading edge.”

Richard began his talk by listing some governance red flags to keep an eye out for. These include lack of board diversity, the presence of legacy, pedigree, and “zombie” board and committee members, beholden advisors who are overly cozy and have no freedom to be adverse, and the gaming of retirement age. He detailed shareholder engagement, stating that the word “management” can mean whatever management wants it to mean, and the reality of shareholders being unable to select or replace directors. Some of the strategic concerns mentioned during his talk include a board unable to control ineffective management, undue influence of a board, and conflicts of interest.

On the subject of changes to executive compensation, Richard said there is no CEO control anymore, that operational & executive management can’t interfere, and that compensation cannot include revenue or operational responsibilities as metrics. He also explained the best practices for risk governance, noting the need for formally documented risk appetite framework, with tolerances, registers, and accountabilities, and for enterprise risk management that is integrated, dynamic, and culturally embedded.

Richard closed his talk by discussing the building of an advisory board. He cautions that an advisory board should advise, not control. A good advisory board should take you places you can’t go on your own, and it should prevent you from making that big mistake. Ultimately, when assembling a board, choose people you can’t hire, but whose advice you admire.